COMPANY

Home Health Workers Worry About Reality of Obama's Pay Rule

President Barack Obama in December announced plans to modify the exemption and extend overtime and minimum wage protections to home-care workers employed by private companies. But the The delay is making labor activists nervous.

An uneasy sense of deja vu is building among advocates for nearly 2 million workers who help the elderly and disabled live independently in their homes.

Because of a 38-year-old amendment to the Fair Labor Standards Act, home health aides and personal care aides in many states can be paid less than the federal minimum wage — $7.25 an hour — and not receive overtime pay when they work more than 40 hours in a week.

Enacted by Congress in 1974, the “companionship services exemption” was supposed to exclude baby sitters and casual companions for the elderly from overtime and minimum wage requirements, not to waive federal pay guidelines for professional caregivers.

So after years of failed efforts to change the guidelines, President Barack Obama in December announced plans to modify the exemption and extend overtime and minimum wage protections to home-care workers employed by private companies.

Nearly 1.8 million workers in 29 states would likely see a pay boost under the proposal, according to government estimates.

But after twice extending the public comment period, the U.S. Department of Labor has yet to finalize the rule change, which must be approved by the White House and then published in the National Register before it takes effect.

The delay is making labor activists nervous. When the Clinton administration tried to close the exemption in late 2000, incoming President George W. Bush killed the effort. Unless the Obama administration acts soon, labor groups fear that if Republican Mitt Romney wins the White House in November, he would heed industry and GOP calls to scuttle the proposal yet again.

“I think there’s a high probability that that could happen,” said Catherine Ruckelshaus, legal co-director at the National Employment Law Project. “We are very concerned about the delays, especially given the history with these regulations.”

The Labor Department says the proposal is still on the regulatory agenda but provided no time frame for completion.

In the years since the exemption became law, home-care workers have become the nation’s fastest-growing occupation, with more than 1.3 million new jobs expected by 2020 as millions of aging baby boomers reach their golden years and require care. As profits at home-care agencies soared, the $84 billion industry has fought to maintain the pay exemptions, which boost revenue by keeping labor costs down.

Nationally, home-care workers average about $20,000 a year, but 40 percent are on Medicaid or food stamps because few work 40-hour weeks. Their low wages typically also make job-based health coverage unaffordable.

Modifying the exemption would bring a host of new costs for the industry, including an estimated $16 million in the first year to increase workers’ pay to the minimum wage. It would add nearly $35 million a year to pay workers for time spent traveling to clients as well, according to Labor Department estimates.

In El Paso, Texas, Elizabeth Castillo earns the minimum wage at one home-care agency and just over the floor wage at another. Castillo, 57, typically logs 56 hours a week, but sometimes she gets food stamps when she doesn’t reach 40 hours. Her meager earnings are further depleted by a $55 weekly gasoline bill for travel to her clients’ homes. Neither of her employers reimburses for mileage.

“I don’t know how I do it, but I do,” she said of her struggles.

Made up largely of older women, minorities and immigrants, the home-care workforce provides many services not envisioned when the exemption became law, like administering medications, assisting with physical therapy and meal preparation.

Because of the low pay, few benefits and the tedious nature of the work, the industry has a high turnover rate. Experts fear that could cause shortages as demand for services grows.

Only 16 states provide overtime and minimum wage guarantees for workers who would otherwise be excluded under the current guidelines. But nearly half of the nation’s home-care workers are employed in 29 other states that do not have such protections, according to the Paraprofessional Healthcare Institute, which advocates for the workers.

In 2007, the U.S. Supreme Court unanimously upheld the companionship exemption, saying that only Congress or the Labor Department could revise it. In response to the Obama proposal, Republican Sens. Mike Johanns of Nebraska and Lamar Alexander of Tennessee introduced legislation in June that would preserve the exemption.

The home-care industry, which is undergoing rapid growth, says the government is underestimating the actual costs of Obama’s proposal. It argues that most home-care workers already earn at least the minimum wage, and increasing the pay of those that don’t would force home-care agencies to raise prices.

That could cause patients to hire freelance independent aides who may not have the training and experience to ensure patient safety, the industry says.

“We believe that eliminating the companionship exemption will force many seniors and people with disabilities into assisted living or institutional care because of the increased cost of in-home care,” said a statement by Shelle Womble, chairman of the Private Duty Homecare Association, an industry trade group.

Industry groups also argue that fragile clients accustomed to their longtime caregivers would have to adjust to new ones if the exemption is eliminated, because agencies would split hours among several workers to avoid paying overtime to one.

But labor advocates say overtime pay is already a rarity for home-care workers. Studies have shown that only 8 percent of home health aides and 15 percent of personal care aides receive overtime when they work more than 40 hours in a week.

Judy Harris of Port Orchard, Wash., cares for a live-in family friend, David Hoffman, who suffered severe burns in a laundry dryer explosion. Medicaid pays Harris to provide just over two hours of care each day. But she routinely works three to four additional hours without compensation because Hoffman, 50, needs special meals, delicate care and his room must be wiped down each day to prevent infection.

Even if the exemption to the Fair Labor Standards Act is closed, Harris, 69, would only be paid for her overtime work if the state Medicaid agency re-evaluates Hoffman’s care needs. Overtime pay is equally elusive for home-care workers at private agencies.

In Tucson, Ariz., Tim Doe said the home-care agency he works for pays $9.40 an hour for 40 hours of work. But he usually works 10 additional hours without pay to complete all his tasks at the group home where he’s assigned.

On weekends, Doe works three 10-hour overnight shifts for another agency that pays him $11.30 per hour. He takes home about $1,100 per week from both jobs, but he said he hasn’t had a raise on either job in four years. His brutal schedule also leaves little time for his three children, ages 5 through 12.

“Emotionally, it’s so hard. But I don’t have a choice,” said Doe, a native of Togo in Africa.

Industry groups argue that mandating higher pay and overtime would financially harm the 22,000 mostly small home-care agencies that comprise the industry. But Joan Leah, president of the Florida Professional Association of Care Givers, doesn’t buy it.

“They already charge high rates to the clients that we serve,” Leah said. “And the clients know that what they’re being charged is very different from what the people that take care of them are being paid.”